Raising money in an economic downturn can be difficult for some, however it can be a great opportunity for strategic entrepreneurs.  If you have a business or concept that actually takes advantage of the current market, investors will readily invest.  A good example of this is the online advertising industry.  Right now companies are not wanting to spend online advertising on traditional cost per impression campaigns, and so they are moving to performance based marketing and new companies will be emerging in that niche since that is where the advertisers are looking to spend.

I spoke this weekend with the managing partner of a tech VC firm and I asked him what types of revenue models he was seeing as being the most promising.  He said that his fund was staying away from ad supported businesses that were reliant upon CPM revenues.  He said that there were so many publishers right now that think that there is unlimited banner inventory out there at premium CPM rates, and it just isnt the case.  Advertisers are not flush with cash the way they were recently and they are either driving down impression rates or migrating to performance driven campaigns.

And don’t get worried, performance driven doesn’t mean straight CPA (cost per acquisition/action).  Performance can mean: pay per click, pay per lead or even pay per engagement.  And that is the reason why a lot of VC funding is now going into the mobile advertising space.  Very few of the ad supported business models in the mobile space are 100% dependant on impression driven campaigns.  The click through rates are far superior to online display banners and it is fairly easy to scale.  It can be accomplished via SMS or mobile banner placements.

He also projected that there is going to be a sizable expansion in the performance driven ad networks since so many advertisers and ad agencies were going to be moving their campaigns to “guaranteed” result campaigns.  So be paying attention to ValuClick, Hydra Media and SocialMedia.  All of these performance driven networks should be seeing some positive revenue growth even during the current economic recession.

And if you are trying to prepare your start up for funding, you might want to have a revenue model built into the plan that is relevent to the current economic status.